Answer:
The given condition is an example of:
A. Menu costs
Explanation:
In the given question mentioning data is that
Jake is been managing a grocery store in any country which is experiencing high rate of inflation. He is mentioned to be paid in cash.
On his very payday he went outside immediately and bought as many goods as he could for himself as he was going to get his pay today and was needing those items.
So, he thought of buying all the items he is needing as for the next two weeks in order of prevention of the money in his wallet from losing value due to high inflation rates.
And at last what he couldn't spend on buying for all that amount he converted that amount into most stable foreign currency for being used as a steep fee.
So all this were an example of :
A. Menu costs
Answer: a.$10,904 increase
Explanation:
Operating income before sales increase:
= Sales - Variable costs - Fixed costs
= 551,000 - (71% * 551,000) - 207,000
= -$47,210
Operating income after sales increase:
Sales increases to:
= 551,000 + 37,600
= $588,600
= 588,600 - (71% * 588,600) - 207,000
= -$36,306
Difference:
= -47,210 - (-36,306)
= Increase of $10,904
Answer:
1. "Would you consider these mixers to be inventory or should they be classified as supplies or equipment?" Why?
The mixers will be part of merchandise inventory since Mei-ling is purchasing them and will later resell them at a higher price and hopefully make a profit. Products classified as supplies or equipment are used by the company in their day to day activities and are not meant for resale.
2. "I’ve learned a little about keeping track of inventory using both the perpetual and the periodic systems of accounting for inventory. Which system do you think is better? Which one would you recommend for the type of inventory that I want to sell?"
The perpetual inventory system is much better than the periodic inventory system, but it is also more expensive to use. Depending on the number of mixers that are going to be sold, you can do it hand or use a computer software which would make things much easier, but you need to spend time (labor) and money to do so.
If Mei-ling is expecting to sell only a small number of mixers, then she could use a periodic inventory system which is much more simple and is only updated every certain period of time (monthly, quarterly, semiannually or annually). This is a cheaper system but it is the best alternative.
3. "How often do I need to count inventory if I maintain it using the perpetual system? Do I need to count inventory at all?"
Even if you use the perpetual inventory system, you will eventually need to physically count your inventory in order to make sure that the records have been properly made, but you could do it once or twice a year. Again it depends on the total units that she expects to have in inventory.
Answer:
1. a. Only major materials and components.
Only the major materials and components are include as direct materials because these are the materials that directly needed for production.
b. Only hourly production workers (aka assembly workers).
The direct labor has to be those people who are directly involved in production which in this case is the assembly workers. Managers and Supervisors are not integral so are not direct labor.
c. Both big items that cannot be traced (e.g., factory rent) and small items that are not worth tracing (e.g., glue, grease).
All other items involved in production should be included as manufacturing overheads including big items and small items that cannot be traced.
2.
Rent for the factory building ⇒ <u>Manufacturing Overhead (OH).</u>
Cost of engines used in production ⇒ <u>Direct materials (DM).</u>
Depreciation on production equipment ⇒ <u>Manufacturing Overhead (OH). </u>
Cost of lubricant used in production. ⇒<u> Manufacturing Overhead (OH). </u>
Production supervisor's salary. ⇒ <u>Manufacturing Overhead (OH). </u>
Assembly workers' wages. ⇒ <u>Direct Labor.</u>
